UK tops G20 economic growth rankings – business news 17 September 2021

James Salmon, Operations Director.

UK tops G20 economic growth rankings. CBI: Budget can boost business.  Large firms struggling to recruit. 4 in 10 staff would hide health issues from employers. Retail Sales.  UK house price growth the world’s 12th steepest. Inflation figures prompt concern over business rates bill and more business news.

UK tops G20 economic growth rankings
The UK economy grew at the fastest rate among the G20 nations in Q2, according to figures from the Organisation for Economic Co-operation and Development (OECD). The British economy expanded 4.8% between April and June, with this almost double the 2.7% recorded by Italy, which ranked second, and outpacing the 1.6% growth seen in the US and China’s 1.3% increase. However, the OECD report also shows that Britain’s output has been one of the weaker performers among the G20 across the whole pandemic, with GDP down 4.4% at the end of Q2 compared to Q4 2019, the last pre-pandemic quarter. GDP across the entire G20 is 0.7% above pre-pandemic levels, with China and Turkey driving the recovery with GDP up 8.2% and 8.8% respectively.

CBI: Budget can boost business
The Confederation of British Industry (CBI) has urged Rishi Sunak to use the autumn Budget to deliver policies designed to tempt private companies to invest in the UK, telling the Chancellor now is not the time for a “play-it-safe Budget”. The business organisation has called on the Government to reform taxes to reward firms that invest in research, innovation and green technologies. The CBI also believes the business rates system needs to be reformed. CBI chief economist Rain Newton-Smith said that while the UK is one of the best places in the world to do business, “we do not have the same investment levels as international peers”. She said the autumn Budget presents a “once-in-a-generation opportunity” to address this.

Large firms struggling to recruit
Office for National Statistics (ONS) data shows that businesses are experiencing difficulties when it comes to recruiting new staff. In the two weeks to 5th September, 41% of companies with 10 or more staff reported greater than usual recruitment challenges, up from 32% at the start of August. Around a quarter of businesses with recruitment difficulties cited a reduced number of EU applicants as a factor. Considering the impact of labour shortages, Hargreaves Lansdown analyst Sarah Coles said the issue has been noted in company earnings reports in the past quarter, commenting: “In some cases, this means businesses are struggling to operate effectively, which in turn is putting the brakes on GDP”. The ONS report also shows that in the first two weeks to September, firms said 6% of staff were receiving furlough payments, with this equivalent to about 1.6m employees.

4 in 10 staff would hide health issues from employers
A poll by healthcare provider Benenden Health has found that 43% of UK employees would not talk to their employer if they were experiencing a health issue, with many saying they would be concerned over the impact it would have on their career and workplace relationships. More than a third (36%) of workers said they have lied to an employer about taking time off for an appointment. The survey of 2,000 employees and 500 business owners also saw 28% of firms say they would have concerns about offering support to those in need. Almost a fifth (19%) said they have previously hired someone with pre-existing health conditions but would not do so again.

Retail Sales

Retail Sales  fell for the second month in a row in August, but people spent more time eating and drinking in bars and restaurants. Sales fell by 0.9% in August, the Office for National Statistics said, following a 2.8% fall in July. Food store sales fell by 1.2%, but the ONS said this was linked to the removal of restrictions on hospitality leading to more people eating out. Overall, sales were 4.6% higher compared to pre-pandemic levels.

UK house price growth the world’s 12th steepest
The Global House Price Index by the estate agency Knight Frank has revealed that the UK saw property values climb 13.2% in the year to June. This saw it ranked 12th out of 55 countries on the league table of annual house price rises across the world. Turkey led, with growth of 29.2%, while New Zealand followed with prices up 25.9%. The report found that a third of the countries analysed recorded annual price growth of more than 10%, while ten of the world’s developed economies averaged annual price growth of 12%. Reflecting on what has driven the increases, Martin Beck, a senior economic adviser to the EY Item Club, said: “The consensus among economists is that it is overwhelmingly about interest rates,” with rates falling across most of the developed world in the past decade.

Inflation figures prompt concern over business rates bill
Real estate adviser Altus Group has warned that soaring inflation could see a punitive rise in business rates, with current inflation data suggesting the rates bill, excluding reliefs, will rise by £1.07bn in 2022. Robert Hayton, head of property tax at Altus Group, said that while the unexpected cost of the pandemic might mean that the Chancellor has “limited short-term scope” to meet a commitment to reducing the burden of tax on commercial property, it “must not also mean that potential reforms are shelved”. He adds: “There are fiscally neutral, and blinding obvious, changes that could be made to property taxes that would increase fairness and pave the way for a better system in the future.”

Lord Frost sets out plans to replace EU regulations
The Government is to begin replacing and removing EU regulations that are still in place in the UK, with Brexit Minister Lord David Frost announcing a “comprehensive review of retained EU law”. While UK officials automatically carried EU laws and regulations into British law to avoid uncertainty and confusion in the immediate wake of Brexit, Lord Frost said the UK now has “the opportunity to do things differently”, saying ministers intend to eventually “amend, to replace or to repeal all that retained EU law that is not right for the UK.” Lord Frost noted that as well as measures proposed by the Taskforce on Innovation, Growth and Regulatory Reform, officials will also consider changes suggested by individual departments. Lord Frost noted that a “two out, one in” rule for future regulation mooted by the taskforce will be adopted.


NextEnergy Solar Fund said formed a £100 million joint venture partnership with Eelpower, a battery storage specialist. The joint venture is targeting the establishment of up to 250MW in projects with £100m in invested capital and has already signed its first acquisition of a 50MW standalone battery storage project.

Tax gap climbs with £35bn lost
HMRC data shows that the amount of tax lost in Britain through non-payment, avoidance and fraud has increased to £35bn. The tax gap – the difference between the Revenue’s expected income and actual receipts – is estimated to have increased by £2bn in the 2019/20 financial year compared to the 12 months before. HMRC says the figure represented a 5.3% shortfall of theoretical tax liabilities due, up from 5% in 2018/19. HMRC data for 2019/20 shows that it collected 95% of the tax it expected to receive, pulling in around £633.4bn. While failure to “take reasonable care” accounted for £6.7bn of the tax gap, avoidance accounted for £1.5bn – with error (£3.7bn) and the “hidden economy” (£3bn) also contributing to the shortfall. George Turner, the executive director of campaign group TaxWatch, has questioned HMRC’s report, suggesting it underplays the amount of tax lost to fraud. He said: “Our analysis, which puts the tax lost to fraud at least £15bn, demonstrates that fraud is a significant problem in the UK and a much larger problem than many previously understood”. Meanwhile, Richard Morley at HW Fisher has praised the tax office, saying that the tax gap of £35bn – or 5.3% – compares to a gap of $400bn (15%) in the US, with this showing that HMRC is doing a good job

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